GT Nexus to merge with TradeCard

Tuesday, January 08, 2013

The software-as-a-service supply chain vendors GT Nexus and TradeCard said Monday they have entered into a merger agreement that will create one of the largest cloud-based platforms in the supply chain arena.
The merger pairs two companies with somewhat similar supply chain visibility platforms, but distinctly different strengths. Oakland-based GT Nexus’ strength lies in transportation visibility and logistics spend management, while New York-based TradeCard’s strengths are in order-to-cash and procure-to-pay cycles.
Both companies provide services in the other’s area of strength, but the merger could allow both to leverage the power of expanded networks.
TradeCard Chief Executive Officer Sean Feeney will be CEO of the merged company, which will be based in Oakland, while GT Nexus CEO Aaron Sasson will become chairman. TradeCard founder Kurt Cavano will be vice chairman. Specifics about the company name and leadership structure will be announced when the transaction is finalized, the companies said.
"Our customers are the biggest winners in this merger," Sasson said. "It's a true merger of equals. Together, we offer a single cloud network for enabling business processes across global trade networks - an enormous and still untapped opportunity for the vast majority of companies who have been struggling to take their businesses to the next level with complicated ERP systems." Both companies bring huge rosters of customers and network partners to the merger, with TradeCard deeply involved in retail supply chains and GT Nexus boasting customers across several shipper verticals, as well as a large number of major 3PLs and ocean carriers.
“Their strength comes from the financial supply chain, and ours from the physical supply chain,” GT Nexus spokesman Greg Kefer told American Shipper. “It’s important that these things be linked. Events between the two processes are related. When you’re paying suppliers, those payments are triggered by things that happen in the physical supply chain.”
Both companies, Kefer said, aspire to create a unified view of supply chain among partners – a single view of the truth, as he put it – so that changing the status of an order is like changing a phone number on LinkedIn. The change only need be made once, and each partner has access to the change.
Kefer said both companies target large multinational companies, and that there was some customer overlap.
“This doubles the size of our company,” he said. “The companies were pretty much the same size, and now we’re all over the world, with lots of feet on the ground.”
The companies had been discussing a merger over the past few months. They said if the merger passes regulatory hurdles, it would close in the first quarter of 2013.
Combined, the companies estimate they would have a network of 20,000 businesses (about 10,000 from each company) and handle $100 billion in direct supply chain trade.
“Both companies share a common technology vision that networked platforms, delivered in the cloud, is the path forward for companies that source and sell goods globally," Feeney said. "The strengths of each company are highly complementary and will offer customers a complete solution, covering the entire supply chain execution lifecycle, from sourcing of goods to final delivery and payment."
Mauricio Barberi, senior vice president, global marketing for TradeCard, said the companies had been on a sort of collision course in recent years. The companies both were started in the late 1990s, and both backed by the private equity firm Warburg Pincus (which still owns a majority stake in TradeCard, though it divested its stake in GT Nexus). Both, Barberi said, are founded on similar architectures.
“Both companies were conceived as cloud-based solutions,” he said in an interview Monday with American Shipper. “That really enables multi-enterprise collaboration. We were conceived and architected that way, so we’re very much aligned in terms of our vision and architecture.”
Barberi said the merger was driven internally, but also by growing feedback from overlapping customers and from analysts that suggested such a complementary offering would be unique and beneficial to customers.
“The feedback from customers was 'What took you so long?’” he said. “We have a handful of joint customers who told us, ‘When are you going to get together?’”
He said a set of customers engaged in a joint project where the two companies services were successfully aligned, which became a "proof point" for a broader partnership.
Barberi stressed the strong geographical footprint the aligned organization will have. Both are strong in North America, where they are headquartered, while GT Nexus has a significant presence in Europe and TradeCard has made huge inroads in the Asia-Pacific region.
He said TradeCard's core product was to link brand owners, such as retailers, with suppliers and factories, and this year it began marketing its solutions directly to suppliers in Asia. The idea is to build a larger network by drawing in retailers through their suppliers, a complementary strategy to a major retailer luring its suppliers onto its network.
The product roadmap will wait until the merger gets regulatory clearance.
“Conceptually, we’re going to look at our capabilities, the products that are mature, and well-received, and make those decisions about where we want to invest in the future,” Barberi said. “Filling some of the white spaces between our services to have the most complete solution.” - Eric Johnson